Members of the City of London Corporation voted 17 to 3 in favor of starting legal proceedings to remove protestors, according to the Guardian, which cited a source inside the closed meeting.
The corporation, which governs London's central financial district, said in a statement that the Occupy London Stock Exchange encampment constituted an ""unreasonable user" of the public thoroughfare around St Paul's.
Cathedral officials have also confirmed that they will "reluctantly" take legal action to remove the camp, while adding that they would continue to seek a "peaceful solution".
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Minutes later, St Paul's reopened its doors for a special service.
It was the first time the cathedral had been open in a week, and marked the end of its longest closure in more than 60 years.
The decision to begin eviction proceedings was hardly surprising, says the Guardian, given the rising tensions between protestors, clergy and city officials.
Corporation Deputy Chairman Michael Welbank said:
"Protest is an essential right in a democracy – but camping on the highway is not and we believe we will have a strong highways case because an encampment on a busy thoroughfare clearly impacts the rights of others."
Earlier on Friday, Prime Minister David Cameron said he was "very concerned" about the Occupy encampment, and that the freedom to demonstrate did not include "the freedom to pitch a tent anywhere you want to in London".
Mayor of London Boris Johnson had blunter words for the protestors, telling them via the London Evening Standard:
"In the name of God and Mammon, go."
The legal battle to remove the camp is set to take several weeks or even months. Lawyers told the Evening Standard that, in a realistic time frame, the protestors are not likely to be evicted until spring 2012.
The demonstrators now face the prospect of forcible eviction by police.
Deputy Mayor Kit Malthouse has suggested using high-powered sprinklers to disperse them.
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